Potential signal:
Selling here, stop at 17.65 and a target of 17.30
The US dollar has slipped a bit against the Mexican peso again on Thursday.
USD/MXN
The US dollar has slipped a bit against the Mexican peso during trading on Thursday as we continue to dance around the 17.50 level. The 17.50 level is an area that has been important and it does seem like we are looking at resistance that extends all the way to at least the 17.65 level. With that being the case, I think it makes a lot of sense that we continue to just jump back and forth in this area. After all, let's be honest here, this is a market where the interest rate differential continues to be a major factor, and therefore, if we short the market, you get paid to hang on to any position when you buy the Mexican peso.
Although it is worth noting that recently the Mexican Central Bank has stated that they are basically done with their interest rate hawkish stance, and if that's the case, it could make this a little bit more of a range-bound market. I think that does make sense to a certain extent that we stay in this range because, quite frankly, most traders are trying to figure out what to do next.
Evaluating Central Bank Policies and Export Dynamics
There are a lot of concerns when it comes to the global supply chain and this market will remain one that will pay close attention to the US economy which is a little sluggish in comparison to what it once was, but as long as it remains somewhat resilient, it's likely that the Mexican peso will be a beneficiary given enough time, mainly due to the fact that Mexico is the number 1 exporter in the world to the US. So, it's a little different situation here where you get paid for a swap, and you get paid for performance in the United States by shorting the US dollar.
I like the idea of fading short-term rallies. I think we're going to remain very choppy. I do think that there is a significant barrier above, but if we were to break through the 200-day EMA, it would change the trend for a lot of traders out there.
Top Regulated Brokers
Ready to trade our Forex daily analysis and predictions? Here are the best forex brokers in Mexico to choose from.